Monday, November 24, 2008

Citibank...

Waking this morning and being greeted with another multi-billion dollar bailout was shocking. Not that another financial institution was being rescued from gross mismanagement, but that this particular institution was, a scant 6 weeks ago, with the government's assistance, at the doorstep of acquiring Wachovia Bank's banking business for $2.2B.

So, what new information came to light for management and the government in only six weeks that caused the stock to crater (down 2/3 before the open)? The government and management teams supporting this massive transaction had ample knowledge of the dangerous ecosystem, and logically should have had access to Citibank's data. Information that logically was available even last week when Citibank suddenly announced a RIF of 52,000 employees.

It is unlikely that markets should improve, nor should they, when stakeholders have such poor transparency to make rational decisions.

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